What’s News in Earnings: Inside Airlines’ Holiday Pricing Strategy

Summary

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Podcast Summary: WSJ What’s News

Episode: What’s News in Earnings: Inside Airlines’ Holiday Pricing Strategy
Date: October 28, 2025
Host: Jacob Passy, Wall Street Journal
Guest: Dean Sealed, WSJ Airline Industry Reporter

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Overview

This episode dives into the state of the airline industry during the latest earnings season. Host Jacob Passy and WSJ reporter Dean Sealed discuss recovering travel demand, evolving airline pricing strategies—especially for the holidays—and notable challenges facing carriers. The conversation reveals which airlines are poised for holiday success, how new pricing models work, and what travelers can expect when booking flights in the coming months.

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Key Discussion Points & Insights

1. Travel Demand Rebound

• [00:18 – 01:48]

  • Earlier in the year, travel demand was sluggish due to a mix of macroeconomic concerns, a fatal air crash in January, and political uncertainty (notably April’s Trump tariff campaign).
  • Demand began to recover in late summer, varying by airline:
    • Some saw a surge as early as July.
    • Others noticed more significant pickups in August and September.
  • This positive trend is carrying over into the holiday season.

  Quote:

  "Demand has actually definitely been on an upswing right now... we're seeing that carrying into the holiday season."
  – Dean Sealed, [01:11]

2. International Travel & Premium Revenue

• [01:49 – 02:29]

  • International travel is especially strong, with increased sales in premium cabin seats.
  • Longer trips mean travelers are willing to upgrade for comfort and amenities.
  • Airlines are introducing new transatlantic routes to capitalize on this demand; for example, United is expanding to underserved European destinations.

  Quote:

  "Premium seats tend to be correlated with an increase in international travel... we've seen some of the carriers catch on to that, too. "
  – Dean Sealed, [01:52]

3. Rising Airfares & The ‘Add-On’ Economy

• [02:30 – 03:32]

  • Airlines are using new pricing models to boost revenue in a high-cost, low-margin environment.
  • "The age of the add-on" means more fees for features like extra leg room, baggage, or priority boarding.
  • This strategy raises revenues even while operating costs climb.

  Quote:

  "We're living right now in the age of the add on. Flying has always been a very low margin product and so airlines are always trying to find ways to squeeze a little bit more profit out."
  – Dean Sealed, [03:05]

• Delta’s Perspective:

  • Ed Bastian, Delta CEO (paraphrased), describes high-income travelers as enthusiastic about paying for premium experiences:

  Quote:

  "Their number one objective is to travel, to go out and adventure, to invest in themselves, invest in the experienced economy... and that's what's driving the great results that we're seeing."
  – Ed Bastian, Delta CEO via Dean Sealed, [02:45]

4. Airline Troubles & Notable Struggles

• [03:33 – 04:18]

  • Alaska Air had a challenging quarter:
    • Revenue up, but profits down 69% due to rising costs.
    • Suffered a major IT outage, canceling about 400 flights—worse than another outage three months prior.
  • Their outlook remains uncertain for the remainder of the year.

  Quote:

  "It's hard not to point out that Alaska Air had a pretty tough week last week...there was another IT outage just about three months ago...this one was much worse."
  – Dean Sealed, [03:39]

5. Outlook for Holiday Travel

• [04:19 – 05:02]

  • Airlines expect heavy fourth-quarter traffic, possibly breaking revenue records due to both higher prices and increased volumes.
  • Potential headwinds include uncertainty around a possible government shutdown affecting air traffic control during Thanksgiving.
  • As of recording, no significant operational impacts due to the shutdown, but this could change.

  Quote:

  "Airlines are expecting to see fourth quarter revenue records...of course we do need to now think too about the government shutdown if we see that edge into the Thanksgiving holiday."
  – Dean Sealed, [04:24]

6. Evolving Flying Experience for Consumers

• [05:03 – 05:27]

  • Travelers should scrutinize fare terms closely:
    • Basic economy may no longer include previously standard features, like checked bags.
    • Consumers need to be proactive and “on the offense” about what’s included and what incurs extra fees.

  Quote:

  "More and more consumers, we have to be on the offense when we're making our purchases. And that definitely applies now for the airlines."
  – Dean Sealed, [05:09]

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Notable Quotes & Memorable Moments

| Timestamp | Speaker | Quote | |-----------|---------------|------------------------------------------------------------------------------------------| | 01:11 | Dean Sealed | "Demand has actually definitely been on an upswing right now... we're seeing that carrying into the holiday season." | | 01:52 | Dean Sealed | "Premium seats tend to be correlated with an increase in international travel..." | | 02:45 | Ed Bastian (via Dean) | "Their number one objective is to travel... invest in themselves, invest in the experienced economy..." | | 03:05 | Dean Sealed | "We're living right now in the age of the add on. Flying has always been a very low margin product..." | | 03:39 | Dean Sealed | "It's hard not to point out that Alaska Air had a pretty tough week last week..." | | 04:24 | Dean Sealed | "Airlines are expecting to see fourth quarter revenue records... think too about the government shutdown..." | | 05:09 | Dean Sealed | "More and more consumers, we have to be on the offense when we're making our purchases..." |

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Timestamps for Key Segments

• 00:18 – 01:48
  Airline demand recovery and the year’s macro shocks

• 01:49 – 02:29
  International travel strength and premium product sales

• 02:30 – 03:32
  Why airfares are rising: the add-on model and Delta’s target customer

• 03:33 – 04:18
  Alaska Air’s financial/reporting and operational turbulence

• 04:19 – 05:02
  Holiday travel volume outlook and the government shutdown wildcard

• 05:03 – 05:27
  Advice for travelers on fare inclusions and hidden add-on fees

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Takeaway

As airlines gear up for the busiest season of the year, travelers face higher fares, evolving pricing models, and a marketplace where knowing what you’re getting (and what it’ll cost extra) is more important than ever. While most carriers are optimistic about holiday demand and revenues, ongoing challenges like IT outages and the specter of a government shutdown add uncertainty to the outlook.

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Transcript

[A]

Exchanges on navigating macro uncertainty Exchanges on the forces shaping global markets. For the sharpest analysis on finance, business and the economy, count on exchanges. The Goldman Sachs Podcast Listen now.

[B]

Hey listeners, it's October 28th. I'm Jacob Passi for the Wall Street Journal, and this is what's News in earnings, our look at the big themes that are standing out this earnings season. This year, the airline industry has been on less than solid ground. Many Americans were skipping vacations because of concerns about the state of the economy. This quarter, though, things are beginning to look up and airlines are getting ready for the holiday travel season. Plus, they're implementing new pricing models allowing them to charge more for airfare. So which carriers are poised for liftoff? We're joined by Wall Street Journal reporter Dean Sealed, who's been tracking airlines for us. So, Dean, how has travel demand been shaping up lately? Are people still postponing their travel plans like they were earlier in the year?

[C]

No. So demand has actually definitely been on an upswing right now. You're right that earlier this year there was a few different things that impacted demand, and that definitely weighed on airline revenues. We had the fatal crash in January, and that was cited by a lot of airlines as impacting their volumes. And then in April, we had President Trump's tariff campaign. That also weighed on consumer confidence and in turn fell on travel demand. But most of the airlines are saying now that demand has picked up. It started to happen later in the summer. Some carriers are saying in July, others saw it more in August, September. But it's definitely been on a resurgence right now. And we're seeing that carrying into the holiday season.

[B]

And so what's the outlook for international travel these days?

[C]

So international travel is actually doing really well. And part of that is we're seeing more premium seats being sold. And premium se tend to be correlated with an increase in international travel because people are taking longer trips. They're going to want some maybe extra leg room or they might be carrying extra baggage with them. So as we're seeing more of that premium revenue coming in, a lot of that is correlated to an increase in people leaving the US and we've seen some of the carriers catch on to that, too. Several have been announcing new routes. United just said that they are opening up some new transatlantic flights that are going to be hitting destinations that are a little bit underserved right now. And a lot of those are in Europe in places where people want to find a holiday destination to go to.

[B]

So as you were just saying, it seems like people are paying more for flights these days. You spoke with the CEO of Delta, Ed Bastian, and here's what he said about the company's customer base, particularly households making six figure income and how they feel about paying up for this.

[D]

Their number one objective is to travel, to go out and adventure, to invest in themselves, invest in the experienced economy and we are the premium provider of that. So we sit at the sweet spot there for that cohort and that's what's driving the great results that we're seeing.

[B]

So digging into it further, what's driving airfares higher?

[C]

We're living right now in the age of the add on. Flying has always been a very low margin product and so airlines are always trying to find ways to squeeze a little bit more profit out. And over the past few years, particularly since the pandemic, we're seeing more airlines finding new ways to charge for added things. Like I said, extra leg room, extra baggage if you want to check in or if you want to board earlier than anyone else. And so that's helping to boost up the top lines of these airlines while they're still dealing with higher operating costs.

[B]

Were there any carriers that were having an especially rough go of it this quarter?

[C]

It's hard not to point out that Alaska Air had a pretty tough week last week. They did put out their report on Thursday night saying that while revenue was up, their profits were down about 69% because their operating costs are outgrowing their revenue. But that report actually came out a couple of hours after a pretty major outage that struck on the west coast that was impacting tons of flights out in Seattle. It was a IT outage that ultimately caused the airline to cancel about 400 flights. This is particularly bad because there was another IT outage just about three months ago that canceled about 90 flights. So by all accounts this one was much worse. So definitely a bad week and they are hoping for a better end of the year. But we'll have to wait and see.

[B]

Now looking ahead, how crazy is the holiday season going to be this year? Are airports going to be packed?

[C]

So carriers are expecting routine busyness through the last three months of the year. A lot of airlines are expecting to see fourth quarter revenue records. Now some of that's probably going to be driven by higher prices, but some of that will just be increased volume and increased traffic that has started up since September. So expect the airlines to be as crazy as usual. Though of course we do need to now think too about the government shutdown if we see that edge into the Thanksgiving holiday. There could be some impacts there. So far, airlines are saying that they haven't really seen impacts from the government shutdown. It seems like air traffic controllers are still showing up to work. But obviously the risk of that situation changing increases as we stretch further into the month.

[B]

So what are the changes to the flying experience that travelers can expect moving forward? That airlines gave us a preview of.

[C]

This quarter that goes back to that add on point that I was making. Consumers are really going to want to pay attention to what comes with the fares that they buy. May be the case that basic economy no longer includes some of the perks or the extra bags that they used to. More and more consumers, we have to be on the offense when we're making our purchases. And that definitely applies now for the airlines.

[B]

All right. Well, we'll have to see how the holiday travel season turns out. Thanks so much for joining, Dean.

[C]

Yeah, thanks for having me.

[B]

And that was what's News in Earnings. Today's show was produced by Zoe Kulkin and Michael Lavall with deputy editor Chris Zinsley. Later today we'll have the PM edition of what's News out for you as usual. And we'll be back later this earnings season, diving into another industry. Until then, I'm Jacob Passi. Have a great day.

[E]

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